Excerpts from Huckabee Company's December 31, 2021 and 2020, financial statements are presented below: 2021 2020 Accounts receivable $ 87,000 $ 79,000 Merchandise inventory 65,000 79,000 Net sales 407,000 379,000 Cost of goods sold 247,000 227,000 Huckabee's 2021 receivables turnover (rounded to 2 decimal places) is:

Question

Annabelle Flores

Business

19 April, 15:03

Excerpts from Huckabee Company's December 31, 2021 and 2020, financial statements are presented below: 2021 2020 Accounts receivable $ 87,000 $ 79,000 Merchandise inventory 65,000 79,000 Net sales 407,000 379,000 Cost of goods sold 247,000 227,000 Huckabee's 2021 receivables turnover (rounded to 2 decimal places) is:

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Karson Greer · Answer 1

Huckabee's 2021 receivables turnover (rounded to 2 decimal places) is 4.90 times

Explanation:

The accounts receivable turnover is an efficiency ratio that measures how many times a company can collect its receivables or money owed by clients during the year.

Accounts receivable turnover is calculated by following formula:

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable

In there:

Average Accounts Receivable = (The beginning accounts receivable of the period balance + The ending accounts receivable of the period balance) / 2

In Huckabee Company, Average Accounts Receivable = ($87,000 + $79,000) / 2 = $83,000

Huckabee's 2021 Accounts Receivable Turnover = Net sales in 2021/Average Accounts Receivable = $407,000/$83,000 = 4.90 times